THE EUROPEAN Commission (EC) has launched an investigation into illegal state subsidies to Germany's Lemwerder airliner-maintenance operation. It has also promised a second inquiry to look at the Irish Government cash due to be injected into the troubled Shannon Aerospace venture.

The Lemwerder aid dates back to 1993, when the German state of Niedersachsen stepped in to rescue the plant after Daimler-Benz Aerospace (DASA) had announced its closure. Niedersachsen provided the operation with new capital and guarantees totalling DM70 million ($50 million).

The EC, which was not given advanced notice of the deal, argues that the support amounts to state aid of an operation which would not otherwise have been viable given the cut-throat state of world maintenance markets.

Brussels has also promised to investigate the rescue package now being negotiated for Shannon Aerospace, which includes IR£12 million ($20 million) of aid from the Irish Government. These proposal has met with strong opposition from the neighbouring UK industry, which has pushed for the EC investigation (Flight International, 3-9 May). Shannon Aerospace says that final details of the rescue are due to put in place "in a matter of days".

The Irish Government has also given its approval for the rescue plan drawn up by Aer Lingus for its TEAM maintenance unit. The proposals will see the airline group, which itself is receiving state aid, provide fresh cash for the struggling business in return for job and cost cuts. The aim is for the business to return to operating profits by 1997 and return a net profit by 1999.

Source: Flight International